Dairy farmers aim for 2nd milk price increase this year due to inflation

Milk prices in Canada may rise for the second time in a year after a rare request from Dairy Farmers of Canada to raise prices mid-year due to inflation.

The industry lobby group says Canadian dairy farmers are struggling with unprecedented price increases for goods and services they need to produce milk.

But industry observers say people can’t afford another price hike.

They warn that dairy processors are likely to make additional hikes if the request is approved, driving retail costs to unsustainable levels and increasing food insecurity.

“The companies are piggybacking on those increases, so it’s going to be a double hit,” Gary Sands, senior vice president of public policy at the Canadian Federation of Independent Grocers, said Saturday.

“Canadians are under a lot of pressure on affordability. They have lost sight of the impact on consumers.”

The Canadian Dairy Commission said Thursday it received a request from Dairy Farmers of Canada in late May to initiate the “exceptional circumstances” process and allow a mid-year milk price increase.

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The request comes after farm-gate milk prices rose six cents per liter on Feb. 1, or about 8.4 percent. Milk prices are usually reviewed once a year.

The commission said it will hold consultations later this month and will issue its decision around June 17.

The federal agency, which oversees Canada’s dairy industry and delivery management system, said the milk price hike will take effect Sept. 1.

‘Lack of transparency’

Dairy Farmers of Canada declined to share how much of a raise it is seeking.

“The lack of transparency is a problem,” Sylvain Charlebois, a professor of food distribution and policy at Dalhousie University, said Saturday.

“They have just assessed the cost to produce milk in Canada and have made a record increase. Now they need more out of the blue and give stakeholders just a few weeks to prepare for consultations, which will not be public.”

A Holstein cow stands in a pasture on a dairy farm near Calgary in 2016. (Jeff McIntosh/The Canadian Press)

Dairy Farmers of Canada said in a statement Thursday that the ex-farm price of milk is being adjusted in a completely open process.

“This transparency is one of the many benefits Canadians derive from our inventory management system,” the group said.

The usual price revision once a year creates a gap between the true cost of producing milk today and the annual adjustment, according to Dairy Farmers of Canada.

“The exceptional circumstances require a mid-year adjustment to close this gap,” the group said.

In less than a year, fertilizer costs are up 44 percent, fuel costs are up 32 percent and livestock feed is up 8 percent, according to Dairy Farmers of Canada.

Sands wondered if the milk price would be lowered if those input costs fell.

“If those supply chain challenges that are driving up costs start to subside in the coming months, will they lower prices?”

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